Melting pot kindergarten: The effect of linguistic diversity in early education

Estimating the effect of linguistic diversity in kindergartens and schools on child development is challenging due to the endogeneity of the language spoken at home and self-selection. We employ an instrumental variables approach to address the former and accounted for self-selection by exploiting the variation in linguistic diversity across cohorts within kindergartens. The estimated causal effects of linguistic diversity are heterogeneous: There is a small negative but statistically significant effect on the development of German children, which is mainly driven by a detrimental effect on the language skills of German speakers, but there is no effect on non-German speakers.